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After Years of wrangling, the government sponsored entities, Fannie and Freddie have changed their policy. They had a questionable “rule” that homeowners could not be permitted to buy back their homes after a foreclosure sale. But now they can. Effectively this allows homeowners to enforce a principal correction where fraudulent inflated appraisals served as the basis for the loan contract. This in large part is a victory for Martha Coakley, attorney general for Massachusetts. Whether the banks will cooperate, since they are still in control of the properties, remains to be seen. My bet is that it will take litigation to force the banks to accept offers from homeowners who lost their homes in foreclosure. Or, the bank will require the homeowner to waive rights to sue for damages in order for their offer to be accepted.
Filed under: foreclosure